29 Apr 2010

Holding that reasons are the heart-beat of any judgment, the Supreme Court in a recent decision has set to terms the procedure required to be observed by all courts in the country. Setting aside a decision of the High Court for want of reasoning, the Court referred to various earlier decisions and the consistent reiteration of the principles relating to assigning of reasons while disposing of a particular matter.

The Supreme Court explained the principle as under;

8. We do find that there is substance in the contention raised on behalf of the petitioner before us. It would have been desirable if the High Court would have recorded some reasons for rejecting the Revision Petition preferred by the Department.

9. The increasing institution of cases in all Courts in India and its resultant burden upon the Courts has invited attention of all concerned in the justice administration system. Despite heavy quantum of cases in Courts, in our view, it would neither be permissible nor possible to state as a principle of law, that while exercising power of judicial review on administrative action and more particularly judgment of courts in appeal before the higher Court, providing of reasons can never be dispensed with. The doctrine of audi alteram partem has three basic essentials. Firstly, a person against whom an order is required to be passed or whose rights are likely to be affected adversely must be granted an opportunity of being heard. Secondly, the concerned authority should provide a fair and transparent procedure and lastly, the authority concerned must apply its mind and dispose of the matter by a reasoned or speaking order. This has been uniformly applied by courts in India and abroad.

10. The Supreme Court in the case of S.N. Mukherjee v. Union of India [(1990) 4 SCC 594], while referring to the practice adopted and insistence placed by the Courts in United States, emphasized the importance of recording of reasons for decisions by the administrative authorities and tribunals. It said “administrative process will best be vindicated by clarity in its exercise”. To enable the Courts to exercise the power of review in consonance with settled principles, the authorities are advised of the considerations underlining the action under review. This Court with approval stated:- “the orderly functioning of the process of review requires that the grounds upon which the administrative agency acted be clearly disclosed and adequately sustained.”

11. In exercise of the power of judicial review, the concept of reasoned orders/actions has been enforced equally by the foreign courts as by the courts in India. The administrative authority and tribunals are obliged to give reasons, absence whereof could render the order liable to judicial chastise. Thus, it will not be far from absolute principle of law that the Courts should record reasons for its conclusions to enable the appellate or higher Courts to exercise their jurisdiction appropriately and in accordance with law. It is the reasoning alone, that can enable a higher or an appellate court to appreciate the controversy in issue in its correct perspective and to hold whether the reasoning recorded by the Court whose order is impugned, is sustainable in law and whether it has adopted the correct legal approach. To sub-serve the purpose of justice delivery system, therefore, it is essential that the Courts should record reasons for its conclusions, whether disposing of the case at admission stage or after regular hearing.

12. At the cost of repetition, we may notice, that this Court has consistently taken the view that recording of reasons is an essential feature of dispensation of justice. A litigant who approaches the Court with any grievance in accordance with law is entitled to know the reasons for grant or rejection of his prayer. Reasons are the soul of orders. Non-recording of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. These principles are not only applicable to administrative or executive actions, but they apply with equal force and, in fact, with a greater degree of precision to judicial pronouncements. A judgment without reasons causes prejudice to the person against whom it is pronounced, as that litigant is unable to know the ground which weighed with the Court in rejecting his claim and also causes impediments in his taking adequate and appropriate grounds before the higher Court in the event of challenge to that judgment. Now, we may refer to certain judgments of this Court as well as of the High Courts which have taken this view.

13. The principle of natural justice has twin ingredients; firstly, the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and granted an opportunity of hearing and secondly, the orders so passed by the authorities should give reason for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the case, vitiate the order itself. Such rule being applicable to the administrative authorities certainly requires that the judgment of the Court should meet with this requirement with higher degree of satisfaction. The order of an administrative authority may not provide reasons like a judgment but the order must be supported by the reasons of rationality. The distinction between passing of an order by an administrative or quasi-judicial authority has practically extinguished and both are required to pass reasoned orders. In the case of Siemens Engineering and Manufacturing Co. of India Ltd. v. Union of India and Anr. [AIR 1976 SC 1785], the Supreme Court held as under:-

“6. ……If courts of law are to be replaced by administrative authorities and tribunals, as indeed, in some kinds of cases, with the proliferation of Administrative Law, they may have to be so replaced, it is essential that administrative authorities and tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them. Then alone administrative authorities and tribunals exercising quasi-judicial function will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. …”

14. In the case of Mc Dermott International Inc. v. Burn Standard Co. Ltd. and Ors. (2006) SLT 345, the Supreme Court clarified the rationality behind providing of reasons and stated the principle as follows:- “. . . Reason is a ground or motive for a belief or a course of action, a statement in justification or explanation of belief or action. It is in this sense that the award must state reasons for the amount awarded. The rationale of the requirement of reasons is that reasons assure that the arbitrator has not acted capriciously. Reasons reveal the grounds on which the Arbitrator reached the conclusion which adversely affects the interests of a party. The contractual stipulation of reasons means, as held in Poyser and Mills’ Arbitration in Re, `proper adequate reasons’. Such reasons shall not only be intelligible but shall be a reason connected with the case which the Court can see is proper. Contradictory reasons are equal to lack of reasons. . . .”

15. In Gurdial Singh Fijji v. State of Punjab [(1979) 2 SCC 368], while dealing with the matter of selection of candidates who could be under review, if not found suitable otherwise, the Court explained the reasons being a link between the materials on which certain conclusions are based and the actual conclusions and held, that where providing reasons for proposed supersession were essential, then it could not be held to be a valid reason that the concerned officer’s record was not such as to justify his selection was not contemplated and thus was not legal. In this context, the Court held – “… “Reasons” are the links between the materials on which certain conclusions are based and the actual conclusions. The Court accordingly held that the mandatory provisions of Regulation 5(5) were not complied with by the Selection Committee. That an officer was “not found suitable” is the conclusion and not a reason in support of the decision to supersede him. True, that it is not expected that the Selection Committee should give anything approaching the judgment of a Court, but it must at least state, as briefly as it may, why it came to the conclusion that the officer concerned was found to be not suitable for inclusion in the Select List.”

16. This principle has been extended to administrative actions on the premise that it applies with greater rigor to the judgments of the Courts. In State of Maharashtra v. Vithal Rao Pritirao Chawan [(1981) 4 SCC 129], while remanding the matter to the High Court for examination of certain issues raised, this Court observed: “. . . It would be for the benefit of this Court that a speaking judgment is given”.

17. In the cases where the Courts have not recorded reasons in the judgment, legality, propriety and correctness of the orders by the Court of competent jurisdiction are challenged in absence of proper discussion. The requirement of recording reasons is applicable with greater rigor to the judicial proceedings. The orders of the Court must reflect what weighed with the Court in granting or declining the relief claimed by the applicant. In this regard we may refer to certain judgments of this Court.

18. A Bench of Bombay High Court in the case of M/s. Pipe Arts India Pvt. Ltd. V. Gangadhar Nathuji Golamare [2008 (6) Maharashtra Law Journal 280], wherein the Bench was concerned with an appeal against an order, where prayer for an interim relief was rejected without stating any reasons in a writ petition challenging the order of the Labour Court noticed, that legality, propriety and correctness of the order was challenged on the ground that no reason was recorded by the learned Single Judge while rejecting the prayer and this has seriously prejudiced the interest of justice. After a detailed discussion on the subject, the Court held:-

“The Supreme Court and different High Courts have taken the view that it is always desirable to record reasons in support of the Government actions whether administrative or quasi judicial. Even if the statutory rules do not impose an obligation upon the authorities still it is expected of the authorities concerned to act fairly and in consonance with basic rule of law. These concepts would require that any order, particularly, the order which can be subject matter of judicial review, is reasoned one. Even in the case of Chabungbambohal Singh v. Union of India and Ors. 1995 (Suppl) 2 SCC 83, the Court held as under:

“His assessment was, however, recorded as "very good" whereas qua the appellant it had been stated unfit. As the appellant was being superseded by one of his juniors, we do not think if it was enough on the part of the Selection Committee to have merely stated unfit, and then to recommend the name of one of his juniors. No reason for unfitness, is reflected in the proceedings, as against what earlier Selection Committees had done to which reference has already been made.” In the case of Jawahar Lal Singh v. Naresh Singh and Ors. (1987) 2 SCC 222, accepting the plea that absence of examination of reasons by the High Court on the basis of which the trial Court discarded prosecution evidence and recorded the finding of an acquittal in favour of all the accused was not appropriate, the Supreme Court held that the order should record reasons. Recording of proper reasons would be essential, so that the Appellate Court would have advantage of considering the considered opinion of the High Court on the reasons which had weighed with the trial Court. In the case of State of Punjab and Ors. v. Surinder Kumar and Ors. [(1992) 1 SCC 489], while noticing the jurisdictional distinction between Article 142 and Article 226 of the Constitution of India, the Supreme Court stated that powers of the Supreme Court under Article 142 are much wider and the Supreme Court would pass orders to do complete justice. The Supreme Court further reiterated the principle with approval that the High Court has the jurisdiction to dismiss petitions or criminal revisions in limini or grant leave asked for by the petitioner but for adequate reasons which should be recorded in the order. The High Court may not pass cryptic order in relation to regularisation of service of the respondents in view of certain directions passed by the Supreme Court under Article 142 of the Constitution of India. Absence of reasoning did not find favour with the Supreme Court. The Supreme Court also stated the principle that powers of the High Court were circumscribed by limitations discussed and declared by judicial decision and it cannot transgress the limits on the basis of whims or subjective opinion varying from Judge to Judge.

In the case of Hindustan Times Ltd. v. Union of India and Ors. [(1998) 2 SCC 242], the Supreme Court while dealing with the cases under the Labour Laws and Employees' Provident Funds and Miscellaneous Provisions Act, 1952 observed that even when the petition under Article 226 is dismissed in limini, it is expected of the High Court to pass a speaking order, may be briefly. Consistent with the view expressed by the Supreme Court in the afore-referred cases, in the case of State of U.P. v. Battan and Ors. [(2001) 10 SCC 607], the Supreme Court held as under: “The High Court has not given any reasons for refusing to grant leave to file appeal against acquittal. The manner in which appeal against acquittal has been dealt with by the High Court leaves much to be desired. Reasons introduce clarity in an order. On plainest consideration of justice, the High Court ought to have set forth its reasons, howsoever brief, in its order. The absence of reasons has rendered the High Court order not sustainable.” Similar view was also taken by the Supreme Court in the case of Raj Kishore Jha v. State of Bihar and Ors. JT 2003 (Supp.2) SC 354. In a very recent judgment, the Supreme Court in the case of State of Orissa v. D haniram Luhar (2004) 5 SCC 568 while dealing with the criminal appeal, insisted that the reasons in support of the decision was a cardinal principle and the High Court should record its reasons while disposing of the matter. The Court held as under:

“8. Even in respect of administrative orders Lord Denning, M.R. In Breen v. Amalgamated Engg. Union observed: “The giving of reasons is one of the fundamentals of good administration." In Alexander Machinery (Dudley) Ltd. v. Crabtree it was observed: "Failure to give reasons amounts to denial of justice." "Reasons are live links between the mind of the decision-taker to the controversy in question and the decision or conclusion arrived at." Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can, by its silence, render it virtually impossible for the Courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made; in other words, a speaking-out. The "inscrutable face of the sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance.”

Following this very view, the Supreme Court in another very recent judgment delivered on 22nd February, 2008, in the case of State of Rajasthan v. Rajendra Prasad Jain Criminal Appeal No. 360/2008 (Arising out of SLP (Crl.) No. 904/2007) stated that "reason is the heartbeat of every conclusion, and without the same it becomes lifeless."

Providing of reasons in orders is of essence in judicial proceedings. Every litigant who approaches the Court with a prayer is entitled to know the reasons for acceptance or rejection of such request. Either of the parties to the lis has a right of appeal and, therefore, it is essential for them to know the considered opinion of the Court to make the remedy of appeal meaningful. It is the reasoning which ultimately culminates into final decision which may be subject to examination of the appellate or other higher Courts. It is not only desirable but, in view of the consistent position of law, mandatory for the Court to pass orders while recording reasons in support thereof, however, brief they may be. Brevity in reasoning cannot be understood in legal parlance as absence of reasons. While no reasoning in support of judicial orders is impermissible, the brief reasoning would suffice to meet the ends of justice at least at the interlocutory stages and would render the remedy of appeal purposeful and meaningful. It is a settled canon of legal jurisprudence that the Courts are vested with discretionary powers but such powers are to be exercised judiciously, equitably and in consonance with the settled principles of law. Whether or not, such judicial discretion has been exercised in accordance with the accepted norms, can only be reflected by the reasons recorded in the order impugned before the higher Court. Often it is said that absence of reasoning may ipso facto indicate whimsical exercise of judicial discretion. Patricia Wald, Chief Justice of the D.C. Circuit Court of Appeals in the Article, Blackrobed Bureaucracy Or Collegiality Under Challenge, (42 MD.L. REV. 766, 782 (1983), observed as under:-

“My own guiding principle is that virtually every appellate decision requires some statement of reasons. The discipline of writing even a few sentences or paragraphs explaining the basis for the judgment insures a level of thought and scrutiny by the Court that a bare signal of affirmance, dismissal, or reversal does not.”

The Court cannot lose sight of the fact that a losing litigant has a cause to plead and a right to challenge the order if it is adverse to him. Opinion of the Court alone can explain the cause which led to passing of the final order. Whether an argument was rejected validly or otherwise, reasoning of the order alone can show. To evaluate the submissions is obligation of the Court and to know the reasons for rejection of its contention is a legitimate expectation on the part of the litigant. Another facet of providing reasoning is to give it a value of precedent which can help in reduction of frivolous litigation. Paul D. Carrington, Daniel J Meador and Maurice Rosenburg, Justice on Appeal 10 (West 1976), observed as under:-

“When reasons are announced and can be weighed, the public can have assurance that the correcting process is working. Announcing reasons can also provide public understanding of how the numerous decisions of the system are integrated. In a busy Court, the reasons are an essential demonstration that the Court did in fact fix its mind on the case at hand. An unreasoned decision has very little claim to acceptance by the defeated party, and is difficult or impossible to accept as an act reflecting systematic application of legal principles. Moreover, the necessity of stating reasons not infrequently changes the results by forcing the judges to come to grips with nettlesome facts or issues which their normal instincts would otherwise cause them to avoid.”

The reasoning in the opinion of the Court, thus, can effectively be analysed or scrutinized by the Appellate Court. The reasons indicated by the Court could be accepted by the Appellate Court without presuming what weighed with the Court while coming to the impugned decision. The cause of expeditious and effective disposal would be furthered by such an approach. A right of appeal could be created by a special statute or under the provisions of the Code governing the procedure. In either of them, absence of reasoning may have the effect of negating the purpose or right of appeal and, thus, may not achieve the ends of justice.

It will be useful to refer words of Justice Roslyn Atkinson, Supreme Court of Queensland, at AIJA Conference at Brisbane on September 13, 2002 in relation to Judgment Writing. Describing that some judgment could be complex, in distinction to routine judgments, where one requires deeper thoughts, and the other could be disposed of easily but in either cases, reasons they must have. While speaking about purpose of the judgment, he said,

“The first matter to consider is the purpose of the judgment. To my mind there are four purposes for any judgment that is written: - (1) to clarify your own thoughts; (2) to explain your decision to the parties; (3) to communicate the reasons for the decision to the public; and (4) to provide reasons for an appeal Court to consider.” Clarity of thought leads to proper reasoning and proper reasoning is the foundation of a just and fair decision.

In Alexander Machinery (Dudley) Ltd. v. Crabtree 1974 ICR 120, the Court went to the extent of observing that "Failure to give reasons amounts to denial of justice". Reasons are really linchpin to administration of justice. They are link between the mind of the decision taker and the controversy in question. To justify our conclusion, reasons are essential. Absence of reasoning would render the judicial order liable to interference by the higher Court. Reasons are the soul of the decision and its absence would render the order open to judicial chastism. The consistent judicial opinion is that every order determining rights of the parties in a Court of law ought not to be recorded without supportive reasons. Issuing reasoned order is not only beneficial to the higher Courts but is even of great utility for providing public understanding of law and imposing self-discipline in the Judge as their discretion is controlled by well established norms. The contention raised before us that absence of reasoning in the impugned order would render the order liable to be set aside, particularly, in face of the fact that the learned Judge found merit in the writ petition and issued rule, therefore, needs to be accepted. We have already noticed that orders even at interlocutory stages may not be as detailed as judgments but should be supported by reason howsoever briefly stated. Absence of reasoning is impermissible in judicial pronouncement. It cannot be disputed that the order in question substantially affect the rights of the parties. There is an award in favour of the workmen and the management had prayed for stay of the operation of the award. The Court has to consider such a plea keeping in view the provisions of Section 17-B of the Industrial Disputes Act, where such a prayer is neither impermissible nor improper. The contentions raised by the parties in support of their respective claims are expected to be dealt with by reasoned orders. We are not intentionally expressing any opinion on the merits of the contentions alleged to have been raised by respective parties before the learned single Judge. Suffice it to note that the impugned order is silent in this regard. According to the learned Counsel appearing for the appellant, various contentions were raised in support of the reliefs claimed but all apparently, have found no favour with the learned Judge and that too for no reasons, as is demonstrated from the order impugned in the present appeals.”

19. The principles stated by this Court, as noticed supra, have been reiterated with approval by a Bench of this Court in a very recent judgment, in State of Uttaranchal v. Sunil Kumar Singh Negi [(2008) 11 SCC 205], where the Court noticed the order of the High Court which is reproduced hereunder:- “I have perused the order dated 27.5.2005 passed by Respondent 2 and I do not find any illegality in the order so as to interfere under Article 226/227 of the Constitution of India. The writ petition lacks merit and is liable to be dismissed.” and the Court concluded as under:- “In view of the specific stand taken by the Department in the affidavit which we have referred to above, the cryptic order passed by the High Court cannot be sustained. The absence of reasons has rendered the High Court order not sustainable. Similar view was expressed in State of U.P. v. Battan. About two decades back in State of Maharashtra v. Vithal Rao Pritirao Chawan the desirability of a speaking order was highlighted. The requirement of indicating reasons has been judicially recognised as imperative. The view was reiterated in Jawahar Lal Singh v. Naresh Singh. In Raj Kishore Jha v. State of Bihar this Court has held that reason is the heartbeat of every conclusion and without the same, it becomes lifeless. “8. … Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made;.…” As observed in State of Orissa vs. Dhaniram Lunar (2004) 5 SCC 568 In the light of the factual details particularly with reference to the stand taken by the Horticulture Department at length in the writ petition and in the light of the principles enunciated by this Court, namely, right to reason is an indispensable part of sound judicial system and reflect the application of mind on the part of the court, we are satisfied that the impugned order of the High Court cannot be sustained.”

19. Besides referring to the above well-established principles, it will also be useful to refer to some text on the subject. H.W.R. Wade in the book “Administrative Law, 7th Edition, stated that the flavour of said reasons is violative of a statutory duty to waive reasons which are normally mandatory. Supporting a view that reasons for decision are essential, it was stated:-

“…..A right to reasons is, therefore, an indispensable part of a sound system of judicial review. Natural justice may provide the best rubric for it, since the giving of reasons is required by the ordinary man’s sense of justice… …..Reasoned decisions are not only vital for the purposes of showing the citizen that he is receiving justice: they are also a valuable discipline for the tribunal itself…..”

20. We are not venturing to comment upon the correctness or otherwise of the contentions of law raised before the High Court in the present petition, but it was certainly expected of the High Court to record some kind of reasons for rejecting the revision petition filed by the Department at the very threshold. A litigant has a legitimate expectation of knowing reasons for rejection of his claim/prayer. It is then alone, that a party would be in a position to challenge the order on appropriate grounds. Besides, this would be for the benefit of the higher or the appellate court. As arguments bring things hidden and obscure to the light of reasons, reasoned judgment where the law and factual matrix of the case is discussed, provides lucidity and foundation for conclusions or exercise of judicial discretion by the courts. Reason is the very life of law. When the reason of a law once ceases, the law itself generally ceases (Wharton’s Law Lexicon). Such is the significance of reasoning in any rule of law. Giving reasons furthers the cause of justice as well as avoids uncertainty. As a matter of fact it helps in the observance of law of precedent. Absence of reasons on the contrary essentially introduces an element of uncertainty, dissatisfaction and give entirely different dimensions to the questions of law raised before the higher/appellate courts. In our view, the court should provide its own grounds and reasons for rejecting claim/prayer of a party whether at the very threshold i.e. at admission stage or after regular hearing, howsoever precise they may be.

21. We would reiterate the principle that when reasons are announced and can be weighed, the public can have assurance that process of correction is in place and working. It is the requirement of law that correction process of judgments should not only appear to be implemented but also seem to have been properly implemented. Reasons for an order would ensure and enhance public confidence and would provide due satisfaction to the consumer of justice under our justice dispensation system. It may not be very correct in law to say, that there is a qualified duty imposed upon the Courts to record reasons. Our procedural law and the established practice, in fact, imposes unqualified obligation upon the Courts to record reasons. There is hardly any statutory provision under the Income Tax Act or under the Constitution itself requiring recording of reasons in the judgments but it is no more res integra and stands unequivocally settled by different judgments of this Court holding that, the courts and tribunals are required to pass reasoned judgments/orders. In fact, Order XIV Rule 2 read with Order XX Rule 1 of the Code of Civil Procedure requires that, the Court should record findings on each issue and such findings which obviously should be reasoned would form part of the judgment, which in turn would be the basis for writing a decree of the Court.

22. By practice adopted in all Courts and by virtue of judge made law, the concept of reasoned judgment has become an indispensable part of basic rule of law and, in fact, is a mandatory requirement of the procedural law. Clarity of thoughts leads to clarity of vision and proper reasoning is the foundation of a just and fair decision. In the case of Alexander Machinery (Dudley) Ltd. (supra), there are apt observations in this regard to say “failure to give reasons amounts to denial of justice”. Reasons are the real live links to the administration of justice. With respect we will contribute to this view. There is a rationale, logic and purpose behind a reasoned judgment. A reasoned judgment is primarily written to clarify own thoughts; communicate the reasons for the decision to the concerned and to provide and ensure that such reasons can be appropriately considered by the appellate/higher Court. Absence of reasons thus would lead to frustrate the very object stated hereinabove. The order in the present case is as cryptic as it was in the case of Sunil Kumar Singh Negi (supra). Being a cryptic order and for the reasons recorded in that case by this Court which we also adopt, the impugned order in the present appeal should meet the same fate.

23. In light of the above principles, now we will revert back to the facts of the present appeal. It cannot be doubted that challenge was raised to the order of the Board before the High Court on alleged questions of law as well as mixed question of law and fact. The contention that the respondent had not manufactured the shutters from the tax paid raw material and also that the contract in question was not impartible but a consequential item for completion of the contract required examination by the High Court. In light of the judgments referred to and relied upon by the parties including the judgment of this Court, it is true that requirement of stating reasons for judicial orders necessarily does not mean a very detailed or lengthy order, but there should be some reasoning recorded by the Court for declining or granting relief to the petitioner. The purpose, as already noticed, is to make the litigant aware of the reasons for which the relief is declined as well as to help the higher Court in assessing the correctness of the view taken by the High Court while disposing off a matter. May be, while dealing with the matter at the admission stage even recording of short listening dealing with the merit of the contentions raised before the High Court may suffice, in contrast, a detailed judgment while matter is being disposed off after final hearing, but in both events, in our view, it is imperative for the High Court to record its own reasoning however short it might be.

24. We are unable to find any infirmity in the arguments advanced on behalf of the Department, that no reasons have been recorded for rejecting the contentions raised, this legal infirmity has, in fact, prejudicially affected the case of the appellant before us. The judgment of the High Court must speak for itself to enable the higher Court to do complete and effective justice between the parties.

22 Apr 2010

The issues relating to competence of the State Governments to levy a tax on the entry of goods and vehicles within the territorial bounds of their States is nowhere to be seen as attaining a finality in near future. In what has the implications of over 30,000 crores of Rupees in taxes due to the various States, the issue are now to be decided by a much larger bench. A two judge bench of the Supreme Court in end of 2008 had raised doubts over the correctness of reasoning in a five judge bench decision of the Supreme Court of 2005 which had in turn followed the time-tested law by another five judge and a seven judge bench decided almost five decades back.

Now that the present five judge bench, constituted to look into the doubts raised by the two judge bench was hearing the issue, was faced with the earlier decisions and thought wiser to reconsider the law which was delivered fifty years back. The five judge bench accordingly has referred the matters to the Chief Justice of India to constitute an appropriate bench (of seven or may be even nine judges of the Supreme Court) to decide the validity and competence of the States.

In the referral order, authored by the designate Chief Justice of India Justice S.H. Kapadia, the Bench noted inter alia as under;

When the hearing commenced before the Constitution Bench, we found that the assessees (original petitioners in the High Courts) are heavily relying upon the tests propounded by a 5-Judge Bench of this Court in Atiabari Tea Co. Ltd. v. The State of Assam and Ors., (1961) 1 SCR 809, which tests subject to the clarification, stood reiterated in the subsequent judgment delivered by a larger Bench of this Court in the case of The Automobile Transport (Rajasthan) Ltd. v. The State of Rajasthan and Ors., (1963) 1 SCR 491. In fact, it may be stated that the Constitution Bench of this Court delivered the judgment in Atiabari Tea Co. Ltd. (supra) on 26th September, 1960. Soon thereafter, on 4th April, 1961, after hearing arguments in full, a 5-Judge Bench of this Court came to the conclusion that the matter needs to be referred to a larger Bench. In the circumstances, a 7-Judge Bench of this Court decided the matter in Automobile Transport (Rajasthan) Ltd. (supra) on 9th April, 1962 reiterating the tests laid down in Atiabari's case (supra) subject to one clarification.

The question, therefore, which we need to answer, in the first instance, before going into the validity of each of the State Laws impugned before us is Whether after 49 years, this Court should revisit the tests propounded in the earlier decisions in the case of Atiabari Tea Co. Ltd. and Automobile Transport (Rajasthan) Ltd. (supra)? At this stage, it may be mentioned that the States whose Entry Tax Laws have been challenged have contended before us that the tests propounded in Atiabari Tea Co. Ltd. and Automobile Transport (Rajasthan) Ltd. (supra) have failed to strike a balance between the "freedom of trade and commerce" under Article 301 of the Constitution and the States' authority to levy taxes under Articles 245 and 246 of the Constitution read with the appropriate Legislative Entries in the Seventh Schedule to the Constitution of India. The states, therefore, sought revisiting of the aforestated two decisions in Atiabari Tea Co. Ltd. and Automobile Transport (Rajasthan) Ltd. (supra) by a larger Bench.

In Keshav Mills Co. Ltd. v. Commissioner of Income-tax, Bombay North, (1965) 2 SCR 908 at p. 921, a Constitution Bench of this Court enacted circumstances in which a reference to the larger Bench would lie. It was held that in revisiting and revising its earlier decision, this Court should ask itself whether in the interest of the public good or for any other valid and compulsive reasons, it is necessary that the earlier decision should be revised? Whether on the earlier occasion, did some patent aspects of the question remain unnoticed, or was the attention of the Court not drawn to any relevant and material statutory provision, or was any previous decision bearing on the point not noticed? What was the impact of the error in the previous decision on public good? Has the earlier decision been followed on subsequent occasions either by this Court or by the High Courts? And, would the reversal of the earlier decision lead to public inconvenience, hardship or mischief?

According to the judgment in Keshav Mills case these and other relevant considerations must be born in mind whenever this Court is called upon to exercise its jurisdiction to review and revisit its earlier decisions. Of course, in Keshav Mills case a caution was sounded to the effect that frequent exercise of this Court of its power to revisit its earlier decisions may incidentally tend to make the law uncertain and introduce confusion which must be avoided. But, that is not to say that if on a subsequent occasion, the Court is satisfied that its earlier decision was clearly erroneous, it should hesitate to correct the error. In conclusion, in Keshav Mills case, this Court observed that it is not possible to lay down any principles which should govern the approach of the Court in dealing with the question of revisiting its earlier decision. It would ultimately depend upon several relevant considerations.

In the case of Central Board of Dawoodi Bohra Community and Anr. v. State of Maharashtra and Anr., (2005) 2 SCC 673, a Constitution Bench of this Court observed that, in case of doubt, a smaller Bench can invite attention of Chief Justice and request for the matter being placed for hearing before a Bench larger than the one whose decision is being doubted.

Applying the tests laid down in the aforestated two cases, i.e., Keshav Mills Co. Ltd. and Central Board of Dawoodi Bohra Community (supra), we find that on number of aspects a larger Bench of this Court needs to revisit the interpretation of Part XIII of the Constitution including the various tests propounded in the judgments of the Constitution Bench of this Court in the aforestated two cases, namely, Atiabari Tea Co. and Automobile Transport (Rajasthan) Ltd. (supra).

...

In conclusion, we may also mention that though the judgments in Atiabari Tea Co. Ltd. and Automobile Transport (Rajasthan) Ltd. (supra) came to be delivered 49 years ago, a doubt was expressed about the tests laid down in those two judgments even in the year 1975 in the case of G.K. Krishnan and Ors. v. State of Tamil Nadu and Ors., (1975) 1 SCC 375 by Mathew, J., vide para 27, which reads as under: "Whether the restrictions visualized by Article 304(b) would include the levy of a non-discriminatory tax is a matter on which there is scope for difference of opinion. Article 304(a) prohibits only imposition of a discriminatory tax. It is not clear from the article that a tax simpliciter can be treated as a restriction on the freedom of internal trade. Article 304(a) is intended to prevent discrimination against imported goods by imposing on them tax at a higher rate than that borne by goods produced in the State. A discriminatory tax against outside goods is not a tax simpliciter but is a barrier to trade and commerce. Article 304 itself makes a distinction between tax and restriction. That apart, taxing powers of the Union and States are separate and mutually exclusive. It is rather strange that power to tax given to States, say, for instance, under Entry 54 of List II to pass a law imposing tax on sale of goods should depend upon the goodwill of the Union Executive."

For the aforestated reasons, let this batch of cases be put before Hon'ble Chief Justice of India for constituting a suitable larger Bench for reconsideration of the judgments of this Court in Atiabari Tea Co. and Automobile Transport (Rajasthan) Ltd. (supra).

Declaring that the law to this regard is settled that even State instrumentalities are liable to compensate a citizen for their wrongs, the Delhi High Court in a recent decision allowed compensation to a victim of police torture. Holding that the person had been subjected to undue harassment from the Delhi Police for being implicated in false cases for about fifteen years, and given the fact that he had to suffer due to the highhandedness of the police during the long pending litigation, the High Court directed the Delhi Police to pay compensation to the person while also directing the Commissioner of Police to send, within a period of two weeks from today, a written apology to him and his family members.

Stating the law in regarding the liability of the State to pay compensation, the High Court observed as under;

23. At this stage this Court considers it necessary to recapitulate the well settled law of liability of the state to pay compensation to victims of police excesses. Recently in Sube Singh v. State of Haryana AIR 2006 SC 1117, the Supreme Court noted that: “Award of compensation as a public law remedy for violation of the fundamental rights enshrined in Article 21 of the Constitution, in addition to the private law remedy under the Law of Torts, was evolved in the last two and half decades.”

24. A decision that is not cited but which perhaps unique in acknowledging the unconstitutional practices adopted by the police and perhaps laid the foundations for the later development of the law in the area is Prem Chand (Paniwala) v. Union of India AIR 1981 SC 613 where the poignant life of a stock witness, and how such persons are "used" by the police, was taken note of by the Supreme Court. Speaking for the Bench, Justice V.R. Krishna Iyer observed: “In Justice, Justices and Justicing and likewise in the Police and Policing, the Peril to the judicial process is best left to imagination if professional perjurers like the self-confessed Paniwala are kept captive by the Police, to be pressed into service for proving "cases". Courts, trusting the Police may act on apparently veracious testimony and sentence people into prison. The community, satisfied with such convictions, may well believe that all is well with law and order. We condemn, in the strongest terms, the systematic pollution of the judicial process and the consequent threat to human rights of innocent persons. We hope that the higher authorities in the Department who, apparently, are not aware of the nefarious goings-on at the lesser levels will immediately take measures to stamp out this unscrupulous menace.” “The petitioner's reply affidavit makes startling disclosures about the police methods of implicating innocent people. However, the version of the petitioner can hardly be swallowed since he is a self-confessed perjurer. Nevertheless, it is not too much to ask Government to take effective measures to prevent Police methods straying into vice. We hopefully remind the State about what Justice Brandieis once observed: [Olmstead v. U. S. (1928) 277 US 438:

Crime is contagious. If the government becomes a law breaker, it breeds contempt for law".... "To declare that in the administration of the criminal law the end justifies the means-to declare that the government may commit crimes in order to secure the conviction of a private criminal-would bring terrible retribution. Against that pernicious doctrine this Court must resolutely set its face. In the same American decision we have just mentioned Justice Holmes observed: We have to choose, and for my part I think it a less evil that some criminals should escape than that the Government should play an ignoble part.”

25.1 Among the early cases where the seeds of the law relating to payment of compensation to victims of state excesses was laid down is the Bhagalpur Blinding case [Khatri (II) v. State of Bihar 1981CriLJ 597], Bhagwati J., (as he then was), speaking for the Bench, posed the following question while considering the relief that could be given by a court for violation of constitutional rights guaranteed in Article 21 of the Constitution: “...but if life or personal liberty is violated otherwise than in accordance with such procedure, is the Court helpless to grant relief to the person who has suffered such deprivation? Why should the court not be prepared to forge new tools and devise new remedies for the purpose of vindicating the most precious of the precious fundamental right to life and personal liberty?”

25.2 The question was expanded in a subsequent order in Bhagalpur Blinding case [Khatri (IV) v. State of Bihar (1981) 3 SCR 145], thus:

“If an officer of the State acting in his official capacity threatens to deprive a person of his life or personal liberty without the authority of law, can such person not approach the court for injuncting the State from acting through such officer in violation of his fundamental right under Article 21 ? Can the State urge in defence in such a case that it is not infringing the fundamental right of the petitioner under Article 21, because the officer who is threatening to do so is acting outside the law and therefore beyond the scope of his authority and hence the State is not responsible for his action? Would this not make a mockery of Article 21 and reduce it to nullity, a mere rope of sand, for, on this view, if the officer is acting according to law there would ex-concessions be no breach of Article 21 and if he is acting without the authority of law, the State would be able to contend that it is not responsible for his action and therefore there is no violation of Article 21. So also if there is any threatened invasion by the State of the fundamental right guaranteed under Article 21, the petitioner who is aggrieved can move the court under Article 32 for a writ injuncting such threatened invasion and if there is any continuing action of the State which is violative of the fundamental right under Article 21, the petitioner can approach the court under Article 32 and ask for a writ striking down the continuance of such action, but where the action taken by the State has already resulted in breach of the fundamental right under Article 21 by deprivation of some limb of the petitioner, would the petitioner have no remedy under Article 32 for breach of the fundamental right guaranteed to him ? Would the court permit itself to become helpless spectator of the violation of the fundamental right of the petitioner by the State and tell the petitioner that though the Constitution has guaranteed the fundamental right to him and has also given him the fundamental right of moving the court for enforcement of his fundamental right, the court cannot give him any relief?"

25.3 Answering the said questions, it was held that when a court trying the writ petition proceeds to inquire into the violation of any right to life or personal liberty, while in police custody, it does so, not for the purpose of adjudicating upon the guilt of any particular officer with a view to punishing him but for the purpose of deciding whether the fundamental right of the petitioners under Article 21 has been violated and the State is liable to pay compensation to them for such violation. This Court clarified that the nature and object of the inquiry is altogether different from that in a criminal case and any decision arrived at in the writ petition on this issue cannot have any relevance much less any binding effect, in any criminal proceeding which may be taken against a particular police officer. The Court further clarified that in a given case, if the investigation is still proceeding, the Court may even defer the inquiry before it until the investigation is completed or if the Court considered it necessary in the interests of Justice, it may postpone its inquiry until after the prosecution was terminated, but that is a matter entirely for the exercise of the discretion of the Court and there is no bar precluding the Court from proceeding with the inquiry before it, even if the investigation or prosecution is pending.

26. In Rudul Sah v. State of Bihar AIR 1983 SC 1086 the Supreme Court ordered compensation to be paid by the state to a person who had to undergo wrongful incarceration for several years. It held:

“10. …The petitioner could have been relegated to the ordinary remedy of a suit if his claim to compensation was factually controversial, in the sense that a civil court may or may not have upheld his claim. But we have no doubt that if the petitioner files a suit to recover damages for his illegal detention, a decree for damages would have to be passed in that suit, though it is not possible to predicate, in the absence of evidence, the precise amount which would be decreed in his favour. In these circumstances, the refusal of this Court to pass an order of compensation in favour of the petitioner will be doing mere lip-service to his fundamental right to liberty which the State Government has so grossly violated. Article 21 which guarantees the right to life and liberty will be denuded of its significant content if the power of this Court were limited to passing orders to release from illegal detention. One of the telling ways in which the violation of that right can reasonably be prevented and due compliance with the mandate of Article 21 secured, is to mulct its violaters in the payment of monetary compensation. Administrative sclerosis leading to flagrant infringements of fundamental rights cannot be corrected by any other method open to the judiciary to adopt. The right to compensation is some palliative for the unlawful acts of instrumentalities which act in the name of public interest and which present for their protection the powers of the State as a shield. If civilisation is not to perish in this country as it has perished in some others too well-known to suffer mention, it is necessary to educate ourselves into accepting that, respect for the rights of individuals is the true bastion of democracy. Therefore, the State must repair the damage done by its officers to the petitioner's rights. It may have recourse against those officers.” (emphasis supplied)

27.1 Nilabati Behera v. State of Orissa AIR 1993 SC 1960 was a case where the son of the petitioner was taken in police custody from his home and was later found dead with bodily injurious on a railway track the next day. The deceased was aged 22 years and his monthly income was between Rs. 1,200 and 1,500 in 1987. The Supreme Court, while directing the State of Orissa to pay a sum of Rs. 1,50,000 as compensation to the Petitioner and Rs. 10,000 as costs to the Supreme Court Legal Aid Committee, observed:

“12. … award of compensation in a proceeding under Article 32 by this court or by the High Court under Article 226 of the Constitution is a remedy available in public law, based on strict liability for contravention of fundamental rights to which the principle of sovereign immunity does not apply, even though it may be available as a defence in private law in an action based on tort.”

“16. In this context, it is sufficient to say that the decision of this Court in Kasturilal upholding the State's plea of sovereign immunity for tortuous acts of its servants is confined to the sphere of liability in tort, which is distinct from the State's liability for contravention of fundamental rights to which the doctrine of sovereign immunity has no application in the constitutional scheme, and is no defence to the constitutional remedy under Articles 32 and 226 of the Constitution which enables award of compensation tor contravention of fundamental rights, when the only practicable mode of enforcement of the fundamental rights can be the award of compensation. The decisions of this Court in Rudul Sah and others in that line relate to award of compensation for contravention of fundamental rights, in the constitutional remedy under Articles 32 and 226 of the Constitution. On the other hand, Kasturilal related to value of goods seized and not returned to the owner due to the fault of Government servants, the claim being of damages for the tort of conversion under the ordinary process, and not a claim for compensation for violation of fundamental rights. Kasturilal is, therefore, inapplicable in this context and distinguishable.”

“37. This Court and the High Courts, being the protectors of the civil liberties of the citizen, have not only the power and jurisdiction but also an obligation to grant relief in exercise of its jurisdiction under Articles 32 and 226 of the Constitution to the victim or the heir of the victim whose fundamental rights under Article 21 of the Constitution of India are established to have been flagrantly infringed by calling upon the State to repair the damage done by its officers to the fundamental rights of the citizen, notwithstanding the right of the citizen to the remedy by way of a civil suit or criminal proceedings. The State, of course has the right to be indemnified by and take such action as may be available to it against the wrongdoer in accordance with law - through appropriate proceedings. Of course, relief in exercise of the power under Article 32 or 226 would be granted only once it is established that there has been an infringement of the fundamental rights of the citizen and no other form of appropriate redressal by the court in the facts and circumstances of the case, is possible. The decisions of this Court in the line of cases starting with Rudul Sah v. State of Bihar & Anr. granted monetary relief to the victims for deprivation of their fundamental rights in proceedings through petitions filed under Article 32 or 226 of the Constitution of India, notwithstanding the rights available under the civil law to the aggrieved party where the courts found that grant of such relief was warranted. It is a sound policy to punish the wrongdoer and it is in that spirit that the Courts have moulded the relief by granting compensation to the victims in exercise of their writ jurisdiction. In doing so the courts take into account not only the interest of the applicant and the respondent but also the interests of the public as a whole with a view to ensure that public bodies or officials do not act unlawfully and do perform their public duties properly particularly where the fundamental rights of a citizen under Article 21 is concerned.” (emphasis supplied)

28. A few years later in State of Madhya Pradesh v. Shyamsunder Trivedi (1995) 4 SCC 262 it was observed: “16. …. Police excesses and the maltreatment of detainees/undertrial prisoners or suspects tarnishes the image of any civilised nation and encourages the men in 'Khaki' to consider themselves to be above the law and sometimes even to become law unto themselves. Unless stern measures are taken to check the malady, the foundations of the criminal justice delivery system would be shaken and the civilization itself would risk the consequence of heading towards perishing. The courts must, therefore, deal with such cases in a realistic manner and with the sensitivity which they deserve otherwise the common man may lose faith in the judiciary itself, which will be a sad day.”

29. Following this was the celebrated decision in D.K. Basu v. State of West Bengal (1997) 1 SCC 416 where the entire law relating to payment of compensation by the state to a victim of state excesses was expostulated. In Mrs. Sudha Rasheed v. Union of India 1995 (1) SCALE 77, the Supreme Court granted compensation of Rs.7,50,000/- to the relatives of an Advocate who had died in police custody. This court in Nasiruddin v. State, [Criminal Writ No. 585 of 1996, decided on December 16, 1997], while relying on the decision of the Supreme Court in D.K. Basu v. State of West Bengal (supra), granted monetary compensation to the father of an accused who died in Tihar Jail as a result of sixteen injuries which were found on his person.

30. Consistent with the law as explained in the above and several later decisions, this Court holds that Prempal is entitled to be compensated by the Respondent State for the suffering he has had to undergo on account of the illegal actions of the police in implicating him falsely in FIR No.231 of 2002 and consequently getting him wrongly arrested and incarcerated unjustifiably for nearly two years and five months. In Sube Singh v. State of Haryana (supra) the Supreme Court sought to draw a distinction between the cases where there was “established and incontrovertible evidence of violation of Article 21” and cases where it was not. The present case falls in the former category. There is no doubt in the facts and circumstances of the present case that there has been a clear-cut violation of the fundamental rights guaranteed to Prempal under Article 21. It is a case that shocks the judicial conscience.

The Ministry of Law and Justice, in collaboration with the Bar Council of India and National Law University, Delhi, is organising a National Consultation for Second Generation Reforms in Legal Education on 1st and 2nd May, 2010 at Vigyan Bhavan, New Delhi which will be inaugurated by Prime Minister of India and the Chief Justice of India will deliver a special address. The Union Minister for Law & Justice, Dr. M. Veerappa Moily, would present a vision statement for Second Generation Reforms in Legal Education.

The purpose of the said National Consultation is to identify the major challenges the Legal Education is facing at present and to draw a roadmap for bringing radical institutional reforms in legal education to meet not only the requirements of the bar but the needs of trade, commerce and industry in view of growing internationalization of the legal profession.

The National Consultation would be attended by Judges of the Supreme Court and High Courts, Attorney General for India, Solicitor General of India and Additional Solicitors Generals, Chairman and other members of the Bar Council of India and State Bar Councils, leading lawyers, eminent Professors of Law, faculty members of Law Universities/Colleges and other institutions.

19 Apr 2010

In a judgment running over 200 pages pronounced by the Supreme Court today, the conviction of Manu Sharma for murder of Jessica Lal has been upheld. Unable to persuade itself with the challenge to the decision of the Delhi High Court, the Supreme Court dismissed all the objections to the conviction sentence in a well reasoned order discussing the fallacies of the defence submissions and rejecting the grounds posed before it to interfere against the conviction.

In the ultimate analysis, the Supreme Court concluded as under;

1) The appellate Court has all the necessary powers to re-evaluate the evidence let in before the trial Court as well as the conclusions reached. It has a duty to specify the compelling and substantial reasons in case it reverses the order of acquittal passed by the trial Court. In the case on hand, the High Court by adhering to all the ingredients and by giving cogent and adequate reasons reversed the order of acquittal.
2) The presence of the accused at the scene of crime is proved through the ocular testimonies of PWs 1, 2, 6, 20, 23, 24 and 70, corroborated by Ex PW 12/D-I as well as 3 PCR calls Ex PW 11/A, B and C.
3) Phone calls made immediately after an incident to the police constitutes an FIR only when they are not vague and cryptic. Calls purely for the reason of getting the police to the scene of crime do not necessarily constitute the FIR. In the present case, the phone calls were vague and therefore could not be registered as the FIR. The FIR was properly lodged as per the statement of Shyan Munshi PW-2.
4) Delay in recording the statement of the witnesses do not necessarily discredit their testimonies. The court may rely on such testimonies if they are cogent and credible.
5) The laboratory reports in the present case are vague and ambiguous and, therefore, they cannot be relied upon to reach any specific conclusion regarding the incident.
6) The evidence regarding the actual incident, the testimonies of witnesses, the evidence connecting the vehicles and cartridges to the accused - Manu Sharma, as well as his conduct after the incident prove his guilt beyond reasonable doubt. The High Court has analyzed all the evidence and arrived at the correct conclusion.
7) The public prosecutor is under a duty of disclosure under the Cr.P.C., Bar Council Rules and relevant principles of common law. Nevertheless, a violation of this duty does not necessarily vitiate the entire trial. A trial would only be vitiated if non-disclosure amounts to a material irregularity and causes irreversible prejudice to the accused. In the present case, no such prejudice was caused to the accused, and therefore the trial is not vitiated.
8) No prejudice had been caused to the right of the accused to fair trial and non-furnishing of the copy of one of the ballistic reports had not hampered the ends of justice. The right of the accused to disclosure has not received any set back in the facts and circumstances of the case.
9) The High Court has rightly convicted the other two accused, namely, Amardeep Singh Gill @ Tony Gill and Vikas Yadav after appreciation of the evidence of PWs 30 and 101.
10) Normally, the judgment/order should be set aside or affirmed as the case may be but preferably without offering any undesirable comments, disparaging remarks or indications which would impinge upon the dignity and respect of judicial system.11) Every effort should be made by the print and electronic media to ensure that the distinction between trial by media and informative media should always be maintained. Trial by media should be avoided particularly, at a stage when the suspect is entitled to the constitutional protections. Invasion of his rights is bound to be held as impermissible.

Holding that even if the insured had committed a breach of the policy it is not open to the insurance company to deny the liability all together, the Supreme Court in a recently pronounced decision held the insurance company liable for 75% of the claim even when the vehicle (which was insured for personal use) met with an accident when being used for hire and not for personal use.

The Court rejected the submissions of the insurance company in the following terms;

10. It is not in dispute that the appellant has taken a comprehensive insurance policy nor is it in dispute that the accident took place during the subsistence of the policy. The policy was, therefore, valid on the date of the accident.

11. What is disputed by the insurance company is that the vehicle was not used for personal use but was used by way of being hired, though no payment for hiring charges was proved. However, according to the insurance company, by using the vehicle on hire, the appellant had violated the terms of the insurance policy and on that basis the insurance company was within its right to repudiate the claim.

12. Reference in this case may be made to the decision of National Commission rendered in the case of United India Insurance Company Limited v. Gian Singh reported in 2006 CTJ 221 (CP) (NCDRC). In that decision of the National Consumer Disputes Redressal Commission (NCDRC) it has been held that in a case of violation of condition of the policy as to the nature of use of the vehicle, the claim ought to be settled on a non-standard basis. The said decision of the National Commission has been referred to by this Court in the case of National Insurance Company Limited v. Nitin Khandelwal reported in 2008 (7) SCALE 351. In paragraph 13 of the judgment, in the case of Nitin Khandelwal (supra) this Court held:-

“..The appellant Insurance Company is liable to indemnify the owner of the vehicle when the insurer has obtained comprehensive policy for the loss caused to the insurer. The respondent submitted that even assuming that there was a breach of condition of the insurance policy, the appellant Insurance Company ought to have settled the claim on nonstandard basis.”

13. In the case of Nitin Khandelwal (supra) the State Commission allowed 75% of the claim of the claimant on non-standard basis. The said order was upheld by the National Commission and this Court refused to interfere with the decision of the National Commission.

14. In this connection reference may be made to a decision of National Commission in the case of New India Assurance Company Limited v. Narayan Prasad Appaprasad Pathak reported in (2006) CPJ 144 (NC). In that case also the question was, whether the insurance company can repudiate the claims in a case where the vehicle carrying passengers and the driver did not have a proper driving licence and met with an accident. While granting claim on non-standard basis the National Commission set out in its judgment the guidelines issued by the insurance company about settling all such non-standard claims. The said guidelines are set out below:-

15. From a perusal of the aforesaid guidelines it is clear that one of the cases where 75% claim of the admissible claim was settled was where condition of policy including limitation as to use was breached.

16. In the instant case the entire stand of the insurance company is that claimant has used the vehicle for hire and in the course of that there has been an accident. Following the aforesaid guidelines, this Court is of the opinion that the insurance company cannot repudiate the claim in toto.

In a recent decision the Supreme Court has revisited the principles which apply in relation to an application for remission of sentence of a convict. Holding that clemency / pardon is an act of grace and also is consistent with the ideals of human liberty, the Supreme Court discussed the principles which govern the consideration of a plea of remission of sentence made by a convict.

Declaring the law, the Supreme Court inter alia observed as under;

26. In Mahender Singh (supra), this Court as referred to hereinabove held that the policy decision applicable in such cases would be which was prevailing at the time of his conviction. This conclusion was arrived on the following ground:

“38. A right to be considered for remission, keeping in view the constitutional safeguards of a convict under Articles 20 and 21 of the Constitution of India, must be held to be a legal one. Such a legal right emanates from not only the Prisons Act but also from the Rules framed thereunder.”

27. Nevertheless, we may point out that the power of the sovereign to grant remission is within its exclusive domain and it is for this reason that our Constitution makers went on to incorporate the provisions of Article 72 and Article 161 of the Constitution of India. This responsibility was cast upon the Executive through a Constitutional mandate to ensure that some public purpose may require fulfillment by grant of remission in appropriate cases. This power was never intended to be used or utilised by the Executive as an unbridled power of reprieve. Power of clemency is to be exercised cautiously and in appropriate cases, which in effect, mitigates the sentence of punishment awarded and which does not, in any way, wipe out the conviction. It is a power which the sovereign exercises against its own judicial mandate. The act of remission of the State does not undo what has been done judicially. The punishment awarded through a judgment is not overruled but the convict gets benefit of a liberalised policy of State pardon. However, the exercise of such power under Article 161 of the Constitution or under Section 433-A Cr. P.C. may have a different flavour in the statutory provisions, as short sentencing policy brings about a mere reduction in the period of imprisonment whereas an act of clemency under Article 161 of the Constitution commutes the sentence itself.

28. In Epuru Sudhakar & Another v. Govt. of A.P. & Ors. AIR 2006 SC 3385 this Court held that reasons had to be indicated while exercising power under Articles 72/161. It was further observed (per Kapadia, J) in his concurring opinion: “Pardons, reprieves and remissions are manifestation of the exercise of prerogative power. These are not acts of grace. They are a part of Constitutional scheme. When a pardon is granted, it is the determination of the ultimate authority that public welfare will be better served by inflicting less than what the judgment has fixed…….. Exercise of Executive clemency is a matter of discretion and yet subject to certain standards. It is not a matter of privilege. It is a matter of performance of official duty. It is vested in the President or the Governor, as the case may be, not for the benefit of the convict only, but for the welfare of the people who may insist on the performance of the duty……. Granting of pardon is in no sense an overturning of a judgment of conviction, but rather it is an Executive action that mitigates or sets aside the punishment for a crime …….. The power under Article 72 as also under Article 161 of the Constitution is of the widest amplitude and envisages myriad kinds and categories of cases with facts and situations varying from case to case.”

29. There is no dispute to the settled legal proposition that the power exercised under Articles 72/161 could be the subject matter of limited judicial review. (videKehar Singh (supra); Ashok Kumar (supra); Swaran Singh v. State of U.P. AIR 1998 SC 2026; Satpal & Anr. v. State of Haryana & Ors. AIR 2000 SC 1702; and Bikas Chatterjee v. Union of India (2004) 7 SCC 634). In Epuru Sudhakar (supra) this Court held that the orders under Articles 72/161 could be challenged on the following grounds:

(a) that the order has been passed without application of mind;

(b) that the order is mala fide;

(c) that the order has been passed on extraneous or wholly irrelevant considerations;

(d) that relevant materials have been kept out of consideration;

(e) that the order suffers from arbitrariness.

30. The power of clemency that has been extended is contained in Articles 72 and 161 of the Constitution. This matter relates to the State of Haryana. The Governor of Haryana may exercise the clemency power. Article 161 of the Constitution enables the Governor of a State “to grant pardons, reprieves, respites or remissions of punishment or to suspend, remit or commute the sentence of any person convicted of any offence against any law relating to a matter to which the executive power of the State extends”

31. Sections 54 and 55 IPC provide for punishment. However, the provisions of Sections 432 and 433-A Cr.P.C., relate to the present controversy. Section 432(1) Cr.P.C. empowers the State Government to suspend or remit sentences of any person sentenced to punishment for an offence, at any time, without conditions or upon any conditions that the person sentenced accepts, suspend the execution of his sentence or remit the whole or any part of the punishment to which he has been sentenced. Section 433-A Cr.P.C. imposes restriction on powers of remission or commutation where a sentence of imprisonment for life is imposed on conviction of a person for an offence for which death is one of the punishment provided by law or where a sentence of death imposed on a person has been commuted under section 433 into one of imprisonment for life, such person shall not be released from prison unless he has served at least fourteen years of imprisonment.

32. Pardon is one of the many prerogatives which have been recognised since time immemorial as being vested in the sovereign, whoever the sovereignty might be. Whether the sovereign happened to be an absolute monarch or a popular republic or a constitutional king or queen, Sovereignty has always been associated with the source of power — the power to appoint or dismiss public servants, the power to declare war and conclude peace, the power to legislate and the power to adjudicate upon all kinds of disputes etc. The rule of law, in contradiction to the rule of man, includes within its wide connotation the absence of arbitrary power, submission to the ordinary law of the land, and the equal protection of the laws. As a result of the historical process aforesaid, the absolute and arbitrary power of the monarch came to be canalised into three distinct wings of the Government, (Vide K.M. Nanavati v. State of Bombay AIR 1961 SC 112).

33. Articles 72 and 161 of the Constitution provide for a residuary sovereign power, thus, there can be nothing to debar the concerned authority to exercise such power, even after rejection of one clemency petition, if the changed circumstances so warrant. (Vide G. Krishta Goud & J. Bhoomaiah v. State of Andhra Pradesh & Ors. (1976) 1 SCC 157)

34. In Regina v. The Secretary of State for the Home Department (1996) EWCA Civ 555, the question came for consideration, before the Court that if the short-sentencing policy is totally inflexible, whether it amounts to transgression on the clemency power of the State which is understood as unfettered? The court considered the issue at length and came to the conclusion as under: “…… the policy must not be so rigid that it does not allow for the exceptional case which requires a departure from the policy, otherwise it could result in fettering of the discretion which would be unlawful…. It is inconsistent with the very flexibility which must have been intended by the Parliament in giving such a wide and untrammeled discretion to the Home Secretary……Approximately 90 years ago an enlightened Parliament recognised that a flexible sentence of detention is what is required in these cases with a very wide discretion being given to the person Parliament thought best suited to oversee that discretion so that the most appropriate decision as to release could be taken in the public interest. The subsequent statutes have not altered the nature of the discretion.” (Emphasis added).

Thus, it was held therein that the clemency power remains unfettered and in exceptional circumstances, variation from the policy is permissible.

35. In view of the above, it is evident that the clemency power of the Executive is absolute and remains unfettered for the reason that the provisions contained under Article 72 or 161 of the Constitution cannot be restricted by the provisions of Sections 432, 433 and 433-A Cr. P.C. though the Authority has to meet the requirements referred to hereinabove while exercising the clemency power. To say that clemency power under Articles 72/161 of the Constitution cannot be exercised by the President or the Governor, as the case may be, before a convict completes the incarceration period provided in the short-sentencing policy, even in an exceptional case, would be mutually inconsistent with the theory that clemency power is unfettered. The Constitution Bench of this Court in Maru Ram (supra) clarified that not only the provisions of Section 433-A Cr. P.C. would apply prospectively but any scheme for short sentencing framed by the State would also apply prospectively. Such a view is in conformity with the provisions of Articles 20 (1) and 21 of the Constitution. The expectancy of period of incarceration is determined soon after the conviction on the basis of the applicable laws and the established practices of the State. When a short sentencing scheme is referable to Article 161 of the Constitution, it cannot be held that the said scheme cannot be pressed in service. Even if, a life convict does not satisfy the requirement of remission rules/short sentencing schemes, there can be no prohibition for the President or the Governor of the State, as the case may be, to exercise the power of clemency under the provisions of Article 72 and 161 of the Constitution. Right of the convict is limited to the extent that his case be considered in accordance with the relevant rules etc., he cannot claim pre-mature release as a matter of right.

36. Two contrary views have always prevailed on the issue of purpose of criminal justice and punishment. The punishment, if taken to be remedial and for the benefit of the convict, remission should be granted. If sentence is taken purely punitive in public interest to vindicate the authority of law and to deter others, it should not be granted. In Salmond on Jurisprudence, 12th Edition by P.J. Fitzgerald, the author in Chapter 15 dealt with the purpose of criminal justice/punishment as under :- “Deterrence acts on the motives of the offender, actual or potential; disablement consists primarily in physical restraint. Reformation, by contrast, seeks to bring about a change in the offender’s character itself so as to reclaim him as a useful member of society. Whereas deterrence looks primarily at the potential criminal outside the dock, reformation aims at the actual offender before the bench. In this century increasing weight has been attached to this aspect. Less frequent use of imprisonment, the abandonment of short sentences, the attempt to use prison as a training rather than a pure punishment, and the greater employment of probation, parole and suspended sentences are evidence of this general trend. At the same time, there has been growing concern to investigate the causes of crime and the effects of penal treatment……... The reformative element must not be overlooked but it must not be allowed to assume undue prominence. How much prominence it may be allowed, is a question of time, place and circumstance.”

R.M.V.Dias, in his book Jurisprudence (Fifth Edition- 1985) observed as under :- “The easing of laws and penalties on anti-social conduct may conceivably result in less freedom and safety for the law-abiding. As Dietze puts it: ‘Just as the despotio variant of democracy all too often has jeopardized human rights, its permissive variant threatens these rights by exposing citizens to the crimes of their fellowmen……… ………. The more law-abiding people lose confidence in the law and those in authority to protect them, the more will they be driven to the alternative of taking matters into their own hands, the perils of which unthinkable and are nearer than some liberty-minded philanthropists seem inclined to allow……”

Legal maxim, “Veniae facilitas incentivum est delinquendi”, is a caveat to the exercise of clemency powers, as it means - “Facility of pardon is an incentive to crime.” It may also prove to be a “grand farce”, if granted arbitrarily, without any justification, to “privileged class deviants”. Thus, no convict should be a “favoured recipient” of clemency.

37. Liberty is one of the most precious and cherished possessions of a human being and he would resist forcefully any attempt to diminish it. Similarly, rehabilitation and social reconstruction of life convict, as objective of punishment become of paramount importance in a welfare state. “Society without crime is a utopian theory”. The State has to achieve the goal of protecting the society from convict and also to rehabilitate the offender. There is a very real risk of revenge attack upon the convict from others. Punishment enables the convict to expiate his crime and assist his rehabilitation. The Remission policy manifests a process of reshaping a person who, under certain circumstances, has indulged in criminal activity and is required to be rehabilitated. Objectives of the punishment are wholly or predominantly reformative and preventive. The basic principle of punishment that “guilty must pay for his crime” should not be extended to the extent that punishment becomes brutal. The matter is required to be examined keeping in view modern reformative concept of punishment. The concept of “Savage Justice” is not to be applied at all. The sentence softening schemes have to be viewed from a more human and social science oriented approach. Punishment should not be regarded as the end but as only the means to an end. The object of punishment must not be to wreak vengeance but to reform and rehabilitate the criminal. More so, relevancy of the circumstances of the offence and the state of mind of the convict, when the offence was committed, are the factors, to be taken note of.

38. At the time of considering the case of pre-mature release of a life convict, the authorities may require to consider his case mainly taking into consideration whether the offence was an individual act of crime without affecting the society at large; whether there was any chance of future recurrence of committing a crime; whether the convict had lost his potentiality in committing the crime; whether there was any fruitful purpose of confining the convict any more; the socio-economic condition of the convict’s family and other similar circumstances.

39. Considerations of public policy and humanitarian impulses – supports the concept of executive power of clemency. If clemency power exercised and sentence is remitted, it does not erase the fact that an individual was convicted of a crime. It merely gives an opportunity to the convict to reintegrate into the society. The modern penology with its correctional and rehabilitative basis emphasis that exercise of such power be made as a means of infusing mercy into the justice system. Power of clemency is required to be pressed in service in an appropriate case. Exceptional circumstances, e.g. suffering of a convict from an incurable disease at last stage, may warrant his release even at much early stage. ‘Vana Est Illa Potentia Quae Nunquam Venit In Actum’ means-vain is that power which never comes into play.

40. Pardon is an act of grace, proceedings from the power entrusted with the execution of the laws, which exempts the individual on whom it is bestowed from the punishment which law inflicts for a crime he has committed. Every civilised society recognises and has therefore provided for the pardoning power to be exercised as an act of grace and humanity in appropriate cases. This power has been exercised in most of the States from time immemorial, and has always been regarded as a necessary attribute of sovereignty. It is also an act of justice, supported by a wise public policy. It cannot, however, be treated as a privilege. It is as much an official duty as any other act. It is vested in the Authority not for the benefit of the convict only, but for the welfare of the people; who may properly insist upon the performance of that duty by him if a pardon or parole is to be granted.

41. This Court in Mahender Singh (supra) has taken note of the provisions of Act 1894 and rules framed thereunder as well as the relevant paragraphs of Punjab Jail Manual. Section 59 (5) of Act 1894 enables the Government to frame rules for “award of marks and shortening of sentence”. Rules define prisoner including a person committed to prison in default of furnishing security to keep peace or be of good behaviour. Rules further provide for classification of prisoners according to the intensity and gravity of the offence. According to the classification of prisoners, Class 1 prisoners are those who had committed heinous organized crimes or specially dangerous criminals. Class 2 prisoners include dacoits or persons who commit heinous organized crimes. Class 3 prisoners are those who do not fall within Class 1 or Class 2. Rule 20 thereof provides that life convict being a Class 1 prisoner if earned such remission as entitles him to release, the Superintendent shall report accordingly to the Local Government with a view to the passing of orders under Section 401 Cr.P.C. Rule 21 provides that save as provided by Rule 20, when a prisoner has earned such remission as entitles him to release, the Superintendent shall release him. Instant case falls in Class 3, not being a case of organized crime or by professionals or hereditary or specially dangerous criminals.

Undoubtedly, the aforesaid rules are applicable in Haryana in view of the State Re-organisation Act. These are statutory rules, not merely executive instructions. Therefore, a “lifer” has a right to get his case considered within the parameters laid down therein. It may not be out of place to mention here that while deciding the case in Sadhu Singh (supra), provisions of the aforesaid Act 1894 and Rules referred to hereinabove, had not been brought to the notice of this Court. More so, consistent past practice adopted by the State can furnish grounds for legitimate expectation (vide Official Liquidator v. Dayanand & Ors. (2008) 10 SCC 1).

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